Browsing by Subject "Retirement"

This dissertation consists of two essays on household portfolio choice. The first essay is entitled 'Household Portfolio Choice and Retirement'. In this first essay, I empirically examine the portfolio decisions of households as they transition into retirement. I document a novel stylized fact: holding household characteristics constant, singles maintain a relatively constant share of risky assets in their financial portfolios as they transition into retirement. On the other hand, couples decrease their share of risky assets significantly. I analyze this difference in behavior, and show that it is not driven by retirement-related background risks for couples relative to singles. Instead, I show that the heterogeneity within couples can be explained by the within-couple difference in spouses' individual risk aversion levels, and that the results are consistent with a net increase in couples' effective household-level risk aversion after retirement. Further, exploiting heterogeneity in couples' relative retirement dates, I show that husbands' and wives' respective retirement events are associated with very different (opposite-signed) persistent effects on the risky share of couples' portfolios. Moreover, I show that the relative magnitude of these persistent effects is consistent with the importance of each spouse's labor income within the household before retirement. Overall, the evidence is consistent with the outcome of a household bargaining game in which wives demand a smaller share of risky assets than their husbands, with each spouse losing some bargaining power after retiring.

In the second essay, entitled 'Household Bargaining and Asset Allocation', we empirically examine the effect of intra-household bargaining on household portfolio choice over the life cycle. We find that fluctuations in the distribution of intra-household bargaining power are associated with significant asset allocation shifts between risky and comparatively safer asset classes in households' portfolios. Our results are robust to alternative risky asset definitions, including investments in stocks, real estate, and holdings in private business, as well as to alternative control specifications. We find that the implied effect of intra-household bargaining is economically large in magnitude, with changes in bargaining power driving within-household variation in risky asset shares comparable to changes in labor income and wealth over the life cycle.

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Retirement is the quintessential transition from mid-life to late-life for many working Americans. However, questions about the positive and negative effects of retirement have sparked widely divergent empirical findings. Developmental theories of self-regulation may add to the understanding of the subtle differences and transitions within retirement. Retirement may be viewed as a transition in resources (e.g., psychological, social, and financial), so that individual mental health outcomes are linked to how well these resources are reallocated. According to goal disengagement perspectives, failure either in disengagement from past goals or reengagement in new goals can lead to decreased well-being and increased depression. Further, as individuals enter late-life, their focus may turn away from growth and achievement and more toward preventing losses and maintaining current resources. In the present study, it was hypothesized that when pre-retirement individuals were compared against early and late post-retirement individuals, engagement in developmentally relevant goals (e.g., self, family, and leisure) in retirees would be associated with better mental health outcomes while retirees who reported continued engagement in less developmentally accessible goals (i.e., occupational and financial) would report worse outcomes.

A total of 100 study participants (aged 50 to 84) were interviewed about their current goals and completed self-report measures of depression, well-being, social support, physical health, and regulatory focus. Interview data were coded for goal content as well as for regulatory focus. Findings did not support the hypotheses, as there were no significant differences among the 47 pre-retirement, 29 early post-retirement, and 24 late post-retirement participants in their goal content or regulatory focus. Goal content also was not associated differentially with depression or well-being among the three groups. However, the interview data did provide valuable information about the heterogeneous and fluid nature of retirement. Retirement, rather than a clear loss in certain resources (i.e., financial and occupational) and a clear gain in others (i.e., time and personal freedom), seemed to be a renegotiation of those resources. Furthermore, even pre-retirement participants named retirement goals, suggesting that, if a goal transition did occur, it may have been a more conscious, gradual process.

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Older women in the U.S. face greater risks of economic insecurity in comparison with other age groups and with men their own age. Although these risks have been documented in prior research, few studies investigate the life course mechanisms underlying women's retirement insecurity. This dissertation seeks to fill this gap by using a life course perspective and the theory of cumulative disadvantage to examine how women's earlier work and family experiences shape subsequent economic resources in retirement. The three major types of retirement resources in the U.S. - Social Security benefits, occupational pensions, and private retirement wealth - are considered. Analyses use a variety of modeling techniques and panel data from the Health and Retirement Study linked to restricted access Social Security Administration files. In addition, this dissertation specifically investigates retirement insecurity across birth cohorts of older women.

The first substantive chapter examines how Social Security benefit eligibility type is influenced by four major life course predictors: marital continuity, family timing, employment commitment, and cohort change. Social Security benefit type is an important indicator of retirement security for women because, despite nearly universal program coverage, benefit type is associated with differential economic security in retirement for women. Multinomial logit models demonstrate the importance of women's own paid employment histories for later benefit type. Receiving own worker Social Security benefits or being dually eligible for Social Security are more likely outcomes with increased employment experience. The second empirical chapter uses discrete-time even history models to examine the timing of women's access to occupation pension income. The timing of pension income receipt is relevant for women's retirement security because delayed access indicates a missing source of economic resources. Results reveal significant cohort differences in the timing of first pension receipt as well as the important roles of marital continuity and family timing for older women's access to occupational pension income. The final empirical chapter employs age-based growth models to examine differential trajectories of private retirement savings in early retirement (ages 51-65) across U.S. birth cohorts of women. This analysis examines both initial retirement wealth and wealth accumulation over time to understand how life course processes advantage some older women, but contribute to ongoing disadvantage for others as part of this third, major source of retirement security. Results from growth models reveal variation across birth cohorts as well as the negative effects of divorce for initial wealth holdings and growth in retirement wealth. Overall, this dissertation illustrates the importance of women's work and family experiences across the life course for the cumulative disadvantages they face in retirement. Moreover, each type of major retirement resource interacts with different aspects of women's prior work and family roles to produce economic outcomes in retirement.